Nigeria Stocks, Bonds Fall, Naira Eases After Oil Prices Plunge

Nigerian stocks and bonds fell on Tuesday, while the naira eased, after a sell-off triggered by a slump in global oil prices.

The main share index .NGSEINDEX fell 4.12 per cent , the biggest daily fall in more than two years, while the yield on the longest 30-year bond shed 75 basis point as investors sold Nigerian assets.

Oil prices faced their biggest rout in nearly 30 years on Monday. However, they jumped by around 10 per cent on Tuesday as investors eyed the possibility of economic stimulus and Russia signaled that talks with OPEC remained possible.

The oil market was hit after OPEC and its ally Russia failed to agree deeper cuts to production as a coronavirus outbreak that started in China spread to other countries and has slashed demand for oil.

“We are seeing offshore funds trying to sell across the curve,” one trader said, adding that they were selling treasury bills more aggressively.

Traders said domestic funds were picking up some of the slack at higher yields.

Nigerian treasury bills fetched between 16 per cent and 17 per cent on Tuesday, up from 14 per cent  before the oil price slump, while the yield on the 30-year bond fell 75 basis points to 13.05 per cent .

The Naira, which has been under pressure from dwindling foreign reserves, eased to 367 over-the-counter, from 366 in its previous session.

Banking stocks .NGSEBNK10 slumped 11.4 per cent on Tuesday, extending the previous day’s losses, after the market opened with shares of major lenders on sell offers. Investors bid to sell 329 million shares each of Guaranty Trust Bank GUARANT.LG and Zenith Bank ZENITHB.LG, causing a sell-off.

Stanbic IBTC.LG also saw heavy sell orders, as did Access Bank ACCESS.LG.

“Investors are widening bid and offer because of fears that offshore may be looking to reduce their exposure,” another trader said.